(Appendix 12A)Green Hornet Company Is Contemplating the Introduction of a New

question 29

Essay

(Appendix 12A)Green Hornet Company is contemplating the introduction of a new product.The company has gathered the following information concerning the product:

$\begin{array}{lccc}\text { Number of Units to Be Produced and Sold Each } & 16,000 \\\text { Year } & \\\text { Investment Required by the Company } & \$ 400,000 \\\text { Expected Unit Product Cost } & \$ 30 \\\text { Expected Annual Selling, General, and } & \\\quad \text { Administrative Expenses } & \$ 100,000\\\text { Desired Rate of Return on Investment }&20 \%\\\end{array}$


The company uses the absorption costing approach to cost-plus pricing.

Required:

a)Compute the markup on absorption cost.
b)Compute the target selling price.

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Definitions:

Quality

A measure or degree of excellence or worth, often relating to product standards or personal attributes.

Marriage

A legally and socially sanctioned union, typically between two people, that is regulated by laws, rules, customs, beliefs, and attitudes that prescribe the rights and duties of the partners.

Neuroticism

A characteristic of personality defined by feelings of gloom, temperamental nature, and erratic emotions.

Extroversion

A personality trait characterized by orientation towards the external world, sociability, and a tendency to seek stimulation in the company of others.